On Friday, Baker Hughes
BHI, -1.64%
reported the rig count for January was 2,457, up 123 from December and 391 higher than a year ago.

It eclipsed the previous 15-year high of 2,430 rigs in action set in February 2001.

"As expected, Canadian land drilling fueled the bulk of the growth in the worldwide rig count ...driven by seasonal and secular strength/growth," noted Stifel Nicolaus & Co. on Monday.

"Other areas of strength included the Latin American and Middle Eastern land drilling markets. Areas of weakness included the European and African offshore drilling markets. The oilfield services industry should gain pricing power."

Also Monday, Morgan Stanley analyst Ole Slorer said the latest price consolidation in the oil services sector has created "a range of buying opportunities."

Drilling demand is growing in nearly every region in the world amid greater-than-expected demand for energy and continued capital investments.

As a result, he upgraded National Oilwell
NOI
to "overweight" from "equal weight" and added the stock to the firm's list of top picks ahead of the company's fourth-quarter report due out on Thursday.

"We do not expect a particularly strong quarter, but the conference call should highlight improved business outlook and new products," Slorer said in a note to clients.

National Oilwell shares rose $1.38, or 5.5 percent, to close at $26.65.

On the New York Mercantile Exchange, crude for March delivery rose 35 cents to settle at $32.83 per barrel. March natural gas gave back 0.5 cent to settle at $5.349 per million British thermal units.

Industry attention will turn to Algeria, where OPEC ministers will convene a much-anticipated meeting of the cartel on Tuesday. See Futures Movers. Oil ministers from the 11-member cartel, which supplies about 40 percent of the world's oil, will announce their decision on production quotas Tuesday, but the market generally expects them to leave the quotas unchanged at 24.5 million barrels per day, excluding Iraq.

In utility news, Teco Energy
TE, +0.00%
posted a fourth quarter net loss of $825 million, or $4.39 a share, or $825 million, compared with a profit of $50.1 million, or 29 cents a share, in the year-earlier period. The company said its results included a $762 million write-off for previous investments in the Union and Gila River power stations. The Thomson First Call mean estimate was for earnings of 12 cents a share. Teco Energy announced on Feb. 5 that it was pulling out of the two power plants. CEO Robert Fagan said the decision to "exit these two plants will make our results more predictable as we move forward, focused on our core Florida utility operations."

Teco gave back 6 cents to close at $14.81.

Meanwhile, shares of Blue Rhino
RINO, +0.00%
shot up more than 20 percent to close at $16.74 after it said it would be acquired by Ferrellgas Partners L.P.
FGP, +0.76%
for about $340 million, or $17 per share, in cash. The companies anticipate the deal will close in May or June. Ferrellgas was up 43 cents to close at $24.81. See full story.

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